Dick Smith in store decline

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#1466287 9-Jan-2016 00:31

richms: According to this, buyers lining up for the place.

http://www.stuff.co.nz/business/industries/75742695/Buyers-line-up-for-Dick-Smith-before-sales-campaign-is-launched?utm_source=dlvr.it&utm_medium=twitter

Hmmmm, Wonder how BS that is just to spur interest in the sale of it?

There's a big difference between tyre kickers and real geninue interested parties. It isn't too much different from real estate agents telling potential buyers that there has been a lot of interested parties in order to get someone putting in an offer quickly.

Dunnersfella

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#1466305 9-Jan-2016 02:05

They hyped the stock market float to get top dollar.

That went well.

If the books make sense to you, your pockets are deep enough and you think you have the skills, fair play.
Otherwise, hype can do funny things... and things can go pear shaped very quickly.

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#1466363 9-Jan-2016 10:04

richms: According to this, buyers lining up for the place.

http://www.stuff.co.nz/business/industries/75742695/Buyers-line-up-for-Dick-Smith-before-sales-campaign-is-launched?

Hmmmm, Wonder how BS that is just to spur interest in the sale of it?

Are you suggesting DSE asked Stuff to create a false article to spur interest?

Doesnt surprise me that there is interest. Instead of buying a going concern who is doing well, buy one thats in trouble, get a great price
and turn it around.

DaveB

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#1466492 9-Jan-2016 13:00

tdgeek:
richms: According to this, buyers lining up for the place.

http://www.stuff.co.nz/business/industries/75742695/Buyers-line-up-for-Dick-Smith-before-sales-campaign-is-launched?

Hmmmm, Wonder how BS that is just to spur interest in the sale of it?

Are you suggesting DSE asked Stuff to create a false article to spur interest?

Doesnt surprise me that there is interest. Instead of buying a going concern who is doing well, buy one thats in trouble, get a great price
and turn it around.

At last. Some good old common-sense comming back into this thread.

sir1963

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#1466496 9-Jan-2016 13:04

tdgeek:
richms: According to this, buyers lining up for the place.

http://www.stuff.co.nz/business/industries/75742695/Buyers-line-up-for-Dick-Smith-before-sales-campaign-is-launched?

Hmmmm, Wonder how BS that is just to spur interest in the sale of it?

Are you suggesting DSE asked Stuff to create a false article to spur interest?

Doesnt surprise me that there is interest. Instead of buying a going concern who is doing well, buy one thats in trouble, get a great price
and turn it around.

This what happened already to DSE.
Got bought by a private equity firm who made $400 million profit by on selling it to suckers.

tdgeek

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#1466521 9-Jan-2016 14:29

sir1963:
tdgeek:
richms: According to this, buyers lining up for the place.

http://www.stuff.co.nz/business/industries/75742695/Buyers-line-up-for-Dick-Smith-before-sales-campaign-is-launched?

Hmmmm, Wonder how BS that is just to spur interest in the sale of it?

Are you suggesting DSE asked Stuff to create a false article to spur interest?

Doesnt surprise me that there is interest. Instead of buying a going concern who is doing well, buy one thats in trouble, get a great price
and turn it around.

This what happened already to DSE.
Got bought by a private equity firm who made $400 million profit by on selling it to suckers.

No, they didnt buy a lack lustre business at a great price, and turned it around. They did a modern day Brierly Investments.
Cheap buy, legal creative accounting and resale , although in BIL's case they asset stripped, but thats incidental detail!

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antonknee

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#1466644 9-Jan-2016 18:27

That stuff article is pretty questionable. The 'insider' who says major brands require cash on delivery is completely wrong - I work for one of those major brands and we certainly extend credit to our retailers. Everything is credit/account based.

I think there will be a lot of interest in it, and I do think it will be sold as a going concern (particularly the NZ arm). I think there's a very good chance the NZ and AU arms will go separately as by all accounts NZ is in better shape than AU (but still not amazing shape).

amiga500

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#1466666 9-Jan-2016 18:56

Funny, a year ago DSE were telling everyone that the Aussie shops were going great and that it was NZ dragging the chain. I think they described NZ 'As a work in progress'. As for selling as a going concern I guess the new owner could garner some instant goodwill by saying that they would honour all the gift vouchers sold. Time will tell just how much interest there really is.

And if you want a pink coloured plastic case for your Samsung S3, DSE Riccarton is the place to go. Only $1.00. Just mind your step though because it looks like they have between a third and a quarter of all the lights turned off plus the ones hanging from the ceiling are non-functional as well. As for buying more expensive items why would anyone want to buy from DSE now if you could get the same thing from Noel Leeming, Harvey Norman, etc and pay about the same and have a full warranty. Buy from DSE and a person would be dealing with the manufacturer.

To me it seems like Panasonic knew what they were doing putting DSE on credit watch and making them front up with cash, and the banks concerned probably have done the right thing financially deciding not to dig themselves into a even bigger loss.

amiga500

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#1466705 9-Jan-2016 19:57

Here is one example of how they are still charging top dollar for some items. DSE website has the Canon 710HS travel zoom camera for $499. On price spy I found around 30 NZ retailers selling it cheaper than that.

I guess prices pitched at this level will keep the shops looking fairly fully stocked until the biz. is sold or not.

tdgeek

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#1466708 9-Jan-2016 20:05

amiga500: Here is one example of how they are still charging top dollar for some items. DSE website has the Canon 710HS travel zoom camera for $499. On price spy I found around 30 NZ retailers selling it cheaper than that.

I guess prices pitched at this level will keep the shops looking fairly fully stocked until the biz. is sold or not.

Wrong.

Accounting 101. Stock on Hand is valued at purchase price, not selling price

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#1466721 9-Jan-2016 20:40

tdgeek:
amiga500: Here is one example of how they are still charging top dollar for some items. DSE website has the Canon 710HS travel zoom camera for $499. On price spy I found around 30 NZ retailers selling it cheaper than that.

I guess prices pitched at this level will keep the shops looking fairly fully stocked until the biz. is sold or not.

Wrong.

Accounting 101. Stock on Hand is valued at purchase price, not selling price

I think the point is that at that price they won't be selling anything so the shops will stay fully stocked

(the issue is suppliers will be reluctant to supple to DSE now unless it's cash in advance - any stock now sold will unlikely be replaced (until a buyer is found) and leave the shops looking even emptier)

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amiga500

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#1466730 9-Jan-2016 20:56

Yes, that is what I was trying to say! They would not want every shelf to look as bare as their hard drives area, where all the portable hard drives have been sold and only a few of the large desktop expansion drives are left.

tdgeek

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#1466768 9-Jan-2016 21:44

amiga500: Yes, that is what I was trying to say! They would not want every shelf to look as bare as their hard drives area, where all the portable hard drives have been sold and only a few of the large desktop expansion drives are left.

Fair enough.

No doubt some suppliers were supplying on COD. If DSE has poor cashflow, COD kills it even further. I'd suggest that the banks are helping now out with underwriting creditors
which in many ways allows creditors to feel more comfortable, now that the recievers are in, that line in the Balance Sheet sand has been drawn, and a creditor can
probably have a bank guarantee of payment, outside of the receivership date last week. I.e. not be added to the list of unsecured creditors. While this goes on, costs are being slashed and strategies being made to strengthen sale as a going concern.

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#1466773 9-Jan-2016 21:55

tdgeek:
amiga500: Yes, that is what I was trying to say! They would not want every shelf to look as bare as their hard drives area, where all the portable hard drives have been sold and only a few of the large desktop expansion drives are left.

Fair enough.

No doubt some suppliers were supplying on COD. If DSE has poor cashflow, COD kills it even further. I'd suggest that the banks are helping now out with underwriting creditors
which in many ways allows creditors to feel more comfortable, now that the recievers are in, that line in the Balance Sheet sand has been drawn, and a creditor can
probably have a bank guarantee of payment, outside of the receivership date last week. I.e. not be added to the list of unsecured creditors. While this goes on, costs are being slashed and strategies being made to strengthen sale as a going concern.

The receivers are first to be paid (top of the priority list). This includes any expenses that the receiver incurs in keeping the business running. Any new credit provided by creditors fall under this so they are first in line to be paid along with the receiver. Credit provided prior to the company going into receivership is not included.

This of course assumes that there will be enough at the end of the day to cover the receivers costs.

tdgeek

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#1466780 9-Jan-2016 22:10

logo:
tdgeek:
amiga500: Yes, that is what I was trying to say! They would not want every shelf to look as bare as their hard drives area, where all the portable hard drives have been sold and only a few of the large desktop expansion drives are left.

Fair enough.

No doubt some suppliers were supplying on COD. If DSE has poor cashflow, COD kills it even further. I'd suggest that the banks are helping now out with underwriting creditors
which in many ways allows creditors to feel more comfortable, now that the recievers are in, that line in the Balance Sheet sand has been drawn, and a creditor can
probably have a bank guarantee of payment, outside of the receivership date last week. I.e. not be added to the list of unsecured creditors. While this goes on, costs are being slashed and strategies being made to strengthen sale as a going concern.

The receivers are first to be paid (top of the priority list). This includes any expenses that the receiver incurs in keeping the business running. Any new credit provided by creditors fall under this so they are first in line to be paid along with the receiver. Credit provided prior to the company going into receivership is not included.

This of course assumes that there will be enough at the end of the day to cover the receivers costs.

I have a financial background, I know the payment order.

The issue is that if receivers allow the purchase of stock, these need to be paid on due date. And they are part of the receivers costs, so must be paid, otherwise the receiver is liable. Thus the issue is cashflow, and is the receiver prepared to be liable? Clearly as the banks are owed a great deal of money, and they have been funding till now, its in their interests to fund the creditor payments themselves, allowing trading to continue. The receiver won't want that risk, nor will the creditor.

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